China’s richest man on the importance of learning from mistakes

China’s richest man, Wang Jianlin, keep saying that it is necessary to take risks in the business world.

But being gutsy is not enough, it is the right kind of risk-taking attitude that matters, the Dalian Wanda chairman points out.

It is important to do your homework before making the leap.

Failures and risk go hand in hand. To gain from risk-taking, one needs to be prepared for failures, probably lots of them, and to learn from failures, however frustrating they might be.

A Wang venture outside his homebase of Dalian had been punctuated with many business errors.

In 1993, the company decided to invest in Guangdong province, but they were new to the market and ended up paying too much for the first land plot. The firm ploughed on.

In 2000, Wanda decided to go into commercial properties, taking the view that operational difficulties in the segment would ensure a less crowded market.

The first project in Changchun in northeastern China was considered to be a flop. That came as even as the units were sold out, helping the company get good prices.

But investors who bought them found that they were unable to make money as rental rates were low. They complained and made a fuss about the problem. The media weighed in and Dalian received plenty of negative publicity.

That prompted the developer to eventually sign a 10-year lease back arrangement.

The next few projects didn’t go smoothly either. Part of the reason being that when a mall was sold piece by piece, there was no proper planning with regard to the overall image, market positioning and tenant mix. Imagine a fashion store sitting right next to a dumpling vendor.

Learning from the lessons, Wanda stopped selling its mall units since 2004 and has instead focused on owning and managing them for long-term rental income.

Besides the capacity to take risk and the ability to learn from mistakes, another key to successful risk-taking is dogged perseverance, Wang says.

All too often, people give up before trying hard enough.

Citing a gold mining industry story, Wang said an operator sold a mine as he dug for 200 meters and found no gold.

But the buyer kept digging and after just twenty more meters, he struck gold.

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